1 July 2015: the new dismissal law
How a layoff comes about
Until 31 June 2015, employers can choose whether to apply for dismissal via the subdistrict court or by giving notice with permission from the UWV. This will change from 1 July 2015. There will be a prescribed route that is linked to the reason for the dismissal. Dismissal for business economic reasons and because of long-term incapacity for work is handled by the UWV. Dismissal on personal grounds goes through the subdistrict court. Think of insufficient functioning or a disturbed employment relationship. The employer will have to choose the right route.
Alternative: agreement (mutual consent)
What does not change is the possibility that the employee and the employer negotiate and agree on the dismissal. The severance pay can then be negotiated higher than in court. Why would the employer choose that? Because only then can he be sure that the dismissal will really go ahead with certain reasons for dismissal. A new rule is that the employee is given a 14-day reflection period and that the agreement must be in writing. Before June 30, 2015, there was no reflection period and an oral agreement was also valid. This regularly led to lawsuits with evidence problems; that is now a thing of the past. On the other hand, the possibility for the employee to declare the agreement invalid within 14 days also leads to uncertainty for the employer, who is after all not certain that the agreement will be maintained; the employee does not have to give a reason for unilaterally declaring the dismissal scheme invalid.
The compensation in the event of dismissal
With effect from 1 July 2015, a severance payment will be introduced for everyone who has been employed for at least two years. The severance pay must be used to find other work as quickly as possible and is therefore called a transition payment. The old subdistrict court formula will disappear after about 20 years. Politicians thought this compensation was too high and wants to limit the dismissal costs for employers. That is why the compensation is also capped at € 75,000. For many employees, the compensation is reduced compared to the old subdistrict court formula. On the other hand, there are also groups of employees who were not eligible for compensation before 1 July 2015, but who are now. For example, employees who leave employment after 2 years of illness and employees with one or more temporary employment contract(s) that have lasted longer than 2 years in total. There are also employees who are not eligible for the allowance: young people up to the age of 18 who work less than 12 hours a week; employees who are retiring and employees who are seriously culpably fired.
How is the transition payment calculated?
The factors that count in the calculation of the transition payment are the monthly salary and the duration of the employment contract: one third of the monthly salary per year of service for the first ten years of service and half of the monthly salary per year of service after the tenth year of service. An example: a 48-year-old employee has worked for his employer for 14 years. His salary is € 3,000 gross per month. The compensation over the first 10 years of service is: € 10,000 (1/3rd x 3,000 x 10). The compensation for the last 4 years of service is: € 6,000 (1/2nd x 3,000 x 4). The compensation is therefore a total of € 16,000 gross (10,000 + 6,000).
What should an employee do if the transition payment is not paid?
The employer must pay the transition payment within one month after the end of the employment. A smooth payment is necessary, because the option to have the subdistrict court decide on a dispute about the transition payment expires within three months after the end of the employment relationship. If the employer does not pay the transition payment on time, he will owe statutory interest. Are you an employee and have you not received the transition payment within a month? Contact a lawyer as soon as possible. After all, your rights may expire.
Higher transition allowance for people over 50
People over the age of fifty with at least ten years of employment receive a transition payment of 1 month for the years of service that they are employed after their 50th birthday. The years after 10 years of employment before the age of 50 provide a transition payment of 1/2 month. This does not apply to small businesses with fewer than 25 employees.
Lower transition payment for employees at small SME employers
For these employees, the actual employment is not assumed, but the commencement of employment from 1 May 2013. Years of service prior to that date therefore do not count. Please note: this only applies if the employee is dismissed for economic reasons and the employer can demonstrate the poor financial situation.
More information about Dismissal